Cigna Beats

Cigna (CI) reported 3rd Quarter September 2017 earnings of $2.83 per share on revenue of $10.4 billion. The consensus earnings estimate was $2.36 per share on revenue of $10.1 billion. The Earnings Whisper number was $2.47 per share. Revenue grew 5.1% on a year-over-year basis.

The company said it expects 2017 earnings of $10.20 to $10.40 per share. The company's previous guidance was earnings of $9.75 to $10.05 per share and the current consensus earnings estimate is $10.04 per share for the year ending December 31, 2017.

Cigna Corp is a health services organization with insurance subsidiaries that are providers of medical, dental, disability, life and accident insurance and related products and services.

•Adjusted income from operations(1,3) is now projected to be in the range of $2.60 billion to $2.65 billion in 2017, or $10.20 to $10.40 per share(4), which represents per share growth of 26% to 28% over 2016

"Cignas third quarter results are driven by consistent, strong
execution of our strategy to provide affordable and personalized
solutions for our customers and clients around the globe," said David M.
Cordani, President and Chief Executive Officer. "As we look ahead to
2018, we expect to drive continued innovation and growth as we deliver
sustained value in a rapidly changing and dynamic environment."

Total revenues in the quarter were $10.4 billion, an increase of 5% over
third quarter 2016, driven by continued growth in Cignas targeted
customer segments.

For the third quarter of 2017, shareholders net income was $560
million, or $2.21 per share, compared with $456 million, or $1.76 per
share, for the third quarter of 2016.

Cignas adjusted income from operations(1) for the third
quarter of 2017 was $716 million, or $2.83 per share, compared with $503
million, or $1.94 per share, for the third quarter of 2016. This
reflects significantly increased earnings contributions from each of our
business segments.

Reconciliations of shareholders net income to adjusted income from
operations(1) are provided on the following page, and on
Exhibit 2 of this earnings release.

CONSOLIDATED HIGHLIGHTS

The following table includes highlights of results and reconciliations
of consolidated operating revenues(5) to total revenues and
adjusted income from operations(1) to shareholders net income:

Consolidated Financial Results (dollars in millions, customers in

thousands):

Nine Months

Three Months Ended

Ended

September 30,

June 30,

September 30,

2017

2016

2017

2017

Total Revenues

$ 10,382

$

9,880

$ 10,318

$

31,085

Net Realized Investment (Gains)

(117)

(75)

(51)

(214)

Consolidated Operating Revenues(5)

$ 10,265

$

9,805

$ 10,267

$

30,871

Consolidated Earnings, net of taxes

Shareholders Net Income

$

560

$

456

$

813

$

1,971

Net Realized Investment (Gains)

(75)

(48)

(34)

(140)

Amortization of Other Acquired Intangible Assets

16

24

18

54

Special Items(1)

215

71

(47)

300

Adjusted Income from Operations(1)

$

716

$

503

$

750

$

2,185

Shareholders Net Income, per share

$

2.21

$

1.76

$

3.15

$

7.67

Adjusted Income from Operations(1), per share

$

2.83

$

1.94

$

2.91

$

8.50

•
Third quarter 2017 shareholders net income included special item(1)
charges of $215 million after-tax, or $0.85 per share, predominantly
associated with the previously disclosed early extinguishment of debt,
compared with special item(1) charges in third quarter 2016
of $71 million after-tax, or $0.28 per share, for merger-related
transaction costs and a litigation matter.

•
Cash and marketable investments at the parent company were $1.7
billion at September 30, 2017 and $2.8 billion at December 31, 2016.

•
Year to date, as of November 1, 2017, the Company repurchased 13.2
million shares of common stock for approximately $2.3 billion.

HIGHLIGHTS OF SEGMENT RESULTS

See Exhibit 2 for a reconciliation of adjusted income (loss) from
operations(1) to shareholders net income.

Global Health Care

This segment includes Cignas Commercial and Government businesses that
deliver medical and specialty health care products and services to
domestic and multi-national clients and customers using guaranteed cost,
retrospectively experience-rated and administrative services only
("ASO") funding arrangements. Specialty health care includes behavioral,
dental, disease and medical management, stop loss and pharmacy-related
products and services.

•
Adjusted income from operations(1) for third quarter 2017 and
second quarter 2017 included favorable prior year reserve development
on an after-tax basis of $19 million and $36 million, respectively.
Third quarter of 2016 did not have a meaningful amount of net prior
year reserve development. Year-to-date 2017 adjusted income from
operations(1) includes favorable prior year reserve
development on an after-tax basis of $116 million.

•
The Total Commercial medical care ratio(8) ("MCR") of 78.6%
for third quarter 2017 reflects strong performance and effective
medical cost management in both our Employer and Individual books of
business, as well as the impact of the health insurance tax moratorium.

•
The Total Government MCR(8) of 84.0% for third quarter 2017
reflects solid performance in our Medicare Advantage and Medicare Part
D businesses.

•
The third quarter 2017 Global Health Care operating expense ratio(8)
of 21.1% reflects the impact of the health insurance tax moratorium,
business mix changes and continued effective expense management.

•
Global Health Care net medical costs payable(9) was
approximately $2.52 billion at September 30, 2017 and $2.26 billion at
December 31, 2016.

Global Supplemental Benefits

This segment includes Cignas global individual supplemental health,
life and accident insurance business, primarily in Asia, and Medicare
supplement coverage in the United States.

Financial Results (dollars in millions, policies in thousands):

Nine Months

Three Months Ended

Ended

September 30,

June 30,

September 30,

2017

2016

2017

2017

Premiums and Fees(10)

$

937

$

833

$

914

$

2,720

Adjusted Income from Operations(1)

$

109

$

81

$

105

$

288

Adjusted Margin, After-Tax(6)

11.1%

9.4%

11.0%

10.1%

As of the Periods Ended

September 30,

June 30,

December 31,

2017

2016

2017

2016

Policies(10)

13,087

12,069

13,058

12,151

•
Global Supplemental Benefits results continue to reflect the value
created by affordable and personalized solutions delivered directly to
individual consumers through a diversified set of distribution
channels.

•
Third quarter 2017 premiums and fees(10) grew 12% over third
quarter 2016, reflecting continued business growth.

Cignas outlook for full year 2017 consolidated adjusted income from
operations(1,3) is in the range of $2.60 billion to $2.65
billion, or $10.20 to $10.40 per share. Cignas outlook excludes the
impact of additional prior year reserve development and potential
effects of any future capital deployment.(4)

(dollars in millions, except where noted and per share amounts)

Projection for Full-Year Ending

December 31, 2017

Adjusted Income (Loss) from Operations(1,3)

Global Health Care

$

2,140 to 2,170

Global Supplemental Benefits

$

345 to 355

Group Disability and Life

$

275 to 285

Ongoing Businesses

$

2,760 to 2,810

Corporate & Other Operations

$

(160)

Consolidated Adjusted Income from Operations(1,3)

$

2,600 to 2,650

Consolidated Adjusted Income from Operations, per share(1,3,4)

$

10.20 to 10.40

2017 Operating Metrics and Ratios Outlook

Total Revenue Growth

Approximately 4%

Full Year Total Commercial Medical Care Ratio(8)

80% to 81%

Full Year Total Government Medical Care Ratio(8)

84.5% to 85.5%

Full Year Global Health Care Operating Expense Ratio(8)

Approximately 21%

Global Medical Customer Growth(2)

Approximately 650,000 customers

The foregoing statements represent the Companys current estimates of
Cignas 2017 consolidated and segment adjusted income from operations(1,3)
and other key metrics as of the date of this release. Actual results may
differ materially depending on a number of factors. Investors are urged
to read the Cautionary Note Regarding Forward-Looking Statements
included in this release. Management does not assume any obligation to
update these estimates.

It is strongly suggested you dial in to the conference call by 8:15 a.m.
EDT.

Notes:

1.

Adjusted income (loss) from operations is defined as

shareholders net income (loss) excluding the following after-tax

adjustments: net realized investment results, net amortization of

other acquired intangible assets and special items. Special items

are identified in Exhibit 2 of this earnings release.

Adjusted income (loss) from operations is a measure of

profitability used by Cignas management because it presents the

underlying results of operations of Cignas businesses and permits

analysis of trends in underlying revenue, expenses and

shareholders net income. This consolidated measure is not

determined in accordance with accounting principles generally

accepted in the United States (GAAP) and should not be viewed as a

substitute for the most directly comparable GAAP measure,

shareholders net income. See Exhibits 1 and 2 for a

reconciliation of adjusted income from operations to shareholders

net income.

2.

Global medical customers include individuals who meet any one

of the following criteria: are covered under a medical insurance

policy, managed care arrangement, or service agreement issued by

Cigna; have access to Cignas provider network for covered

services under their medical plan; or have medical claims and

services that are administered by Cigna.

3.

Management is not able to provide a reconciliation to

shareholders net income (loss) on a forward-looking basis because

we are unable to predict, without unreasonable effort, certain

components thereof including (i) future net realized investment

results and (ii) future special items. These items are inherently

uncertain and depend on various factors, many of which are beyond

our control. As such, any associated estimate and its impact on

shareholders net income could vary materially.

4.

The Companys outlook excludes the potential effects of any

share repurchases or business combinations that may occur after

the date of this earnings release.

5.

The measure "consolidated operating revenues" is not determined

in accordance with GAAP and should not be viewed as a substitute

for the most directly comparable GAAP measure, "total revenues."

We define consolidated operating revenues as total revenues

excluding realized investment results. We exclude realized

investment results from this measure because our portfolio

managers may sell investments based on factors largely unrelated

to the underlying business purposes of each segment. As a result,

gains or losses created in this process may not be indicative of

past or future underlying performance of the business. See Exhibit

1 for a reconciliation of consolidated operating revenues to total

revenues.

6.

Adjusted margin, after-tax, is calculated by dividing adjusted

income (loss) from operations by operating revenues for each

segment.

7.

Prior period behavioral care customers have been revised to

conform to current presentation.

8.

Operating ratios are defined as follows:

?

Total Commercial medical care ratio represents medical costs as

a percentage of premiums for all commercial risk products,

including medical, pharmacy, dental, stop loss and behavioral

products provided through guaranteed cost or experience-rated

funding arrangements in both the United States and internationally.

?

Total Government medical care ratio represents medical costs as

a percentage of premiums for Medicare Advantage, Medicare Part D,

and Medicaid products.

?

Global Health Care operating expense ratio represents operating

expenses excluding acquisition related amortization expense as a

percentage of operating revenue in the Global Health Care segment.

9.

Global Health Care medical costs payable are presented net of

reinsurance and other recoverables. The gross Global Health Care

medical costs payable balance was $2.78 billion as of September

30, 2017 and $2.53 billion as of December 31, 2016.

10.

Cigna owns a 50% noncontrolling interest in its China joint

venture. Cignas 50% share of the joint ventures earnings is

reported in Other Revenues using the equity method of accounting

under GAAP. As such, the premiums and fees and policy counts for

the Global Supplemental Benefits segment do not include the China

joint venture.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release, and oral statements made with respect to information
contained in this release, may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on Cignas current expectations and
projections about future trends, events and uncertainties. These
statements are not historical facts. Forward-looking statements may
include, among others, statements concerning our projected adjusted
income (loss) from operations outlook for 2017, on both a consolidated
and segment basis; projected total revenue growth and global medical
customer growth, each over year end 2016; projected growth in 2018 and
beyond; projected medical care and operating expense ratios and medical
cost trends; future financial or operating performance, including our
ability to deliver personalized and innovative solutions for our
customers and clients; future growth, business strategy, strategic or
operational initiatives; economic, regulatory or competitive
environments, particularly with respect to the pace and extent of change
in these areas; financing or capital deployment plans and amounts
available for future deployment; our prospects for growth in the coming
years; and other statements regarding Cignas future beliefs,
expectations, plans, intentions, financial condition or performance. You
may identify forward-looking statements by the use of words such as
"believe," "expect," "plan," "intend," "anticipate," "estimate,"
"predict," "potential," "may," "should," "will" or other words or
expressions of similar meaning, although not all forward-looking
statements contain such terms.

Forward-looking statements are subject to risks and uncertainties, both
known and unknown, that could cause actual results to differ materially
from those expressed or implied in forward-looking statements. Such
risks and uncertainties include, but are not limited to: our ability to
achieve our financial, strategic and operational plans or initiatives;
our ability to predict and manage medical costs and price effectively
and develop and maintain good relationships with physicians, hospitals
and other health care providers; the impact of modifications to our
operations and processes, including those in our disability business;
our ability to identify potential strategic acquisitions or transactions
and realize the expected benefits of such transactions; the substantial
level of government regulation over our business and the potential
effects of new laws or regulations or changes in existing laws or
regulations; the outcome of litigation, regulatory audits,
investigations, actions and/or guaranty fund assessments; uncertainties
surrounding participation in government-sponsored programs such as
Medicare; the effectiveness and security of our information technology
and other business systems; unfavorable industry, economic or political
conditions including foreign currency movements; acts of war, terrorism,
natural disasters or pandemics; uncertainty as to the outcome of the
litigation between Cigna and Anthem, Inc. with respect to the
termination of the merger agreement, the reverse termination fee and/or
contract and non-contract damages for claims each party has filed
against the other, including the risk that a court finds that Cigna has
not complied with its obligations under the merger agreement, is not
entitled to receive the reverse termination fee or is liable for breach
of the merger agreement;, as well as more specific risks and
uncertainties discussed in our most recent report on Form 10-K and
subsequent reports on Forms 10-Q and 8-K available on the Investor
Relations section of www.cigna.com.
You should not place undue reliance on forward-looking statements, which
speak only as of the date they are made, are not guarantees of future
performance or results, and are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Cigna undertakes
no obligation to update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise, except as
may be required by law.

CIGNA CORPORATION

COMPARATIVE SUMMARY OF FINANCIAL RESULTS (unaudited)

Exhibit 1

(Dollars in millions, except per share amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2017

2016

2017

2016

REVENUES

Premiums

$

8,030

$

7,605

$

24,143

$

23,005

Fees

1,137

1,086

3,417

3,346

Net investment income

298

282

909

848

Mail order pharmacy revenues

733

762

2,200

2,207

Other revenues

67

70

202

208

Consolidated operating revenues

10,265

9,805

30,871

29,614

Net realized investment gains

117

75

214

110

Total revenues

$

10,382

$

9,880

$

31,085

$

29,724

SHAREHOLDERS NET INCOME (LOSS)

Shareholders net income

$

560

$

456

$

1,971

$

1,485

After-tax adjustments to reconcile to adjusted income from

operations:

Realized investment (gains)

(75)

(48)

(140)

(71)

Amortization of other acquired intangible assets, net

16

24

54

72

Special items

215

71

300

133

Adjusted income from operations (1)

$

716

$

503

$

2,185

$

1,619

Adjusted income (loss) from operations by

segment

Global Health Care

$

575

$

416

$

1,776

$

1,446

Global Supplemental Benefits

109

81

288

231

Group Disability and Life

73

53

224

56

Ongoing Operations

757

550

2,288

1,733

Corporate and Other

(41)

(47)

(103)

(114)

Total adjusted income from operations

$

716

$

503

$

2,185

$

1,619

DILUTED EARNINGS PER SHARE

Shareholders net income

$

2.21

$

1.76

$

7.67

$

5.72

After-tax adjustments to reconcile to adjusted income from

operations:

Realized investment (gains)

(0.29)

(0.19)

(0.54)

(0.27)

Amortization of other acquired intangible assets, net

0.06

0.09

0.21

0.28

Special items

0.85

0.28

1.16

0.51

Adjusted income from operations (1)

$

2.83

$

1.94

$

8.50

$

6.24

Weighted average shares (in thousands)

253,410

259,754

257,058

259,568

Common shares outstanding (in thousands)

247,573

256,720

SHAREHOLDERS EQUITY at September 30

$

14,145

$

13,974

SHAREHOLDERS EQUITY PER SHARE at September 30

$

57.13

$

54.43

(1) Adjusted income (loss) from operations is defined as
shareholders net income (loss) excluding the following after-tax
adjustments: realized investment results; net amortization of other
acquired intangible assets; and special items (identified and quantified
on Exhibit 2).

CIGNA CORPORATION

RECONCILIATION OF SHAREHOLDERS NET INCOME (LOSS) TO ADJUSTED

Exhibit 2

INCOME FROM OPERATIONS

(Dollars in millions, except per share amounts)

Diluted

Global

Group

Corporate

Earnings

Global

Supplemental

Disability

and

Per Share

Consolidated

Health Care

Benefits

and Life

Other

Three Months Ended,

3Q17

3Q16

2Q17

3Q17

3Q16

2Q17

3Q17

3Q16

2Q17

3Q17

3Q16

2Q17

3Q17

3Q16

2Q17

3Q17

3Q16

2Q17

Shareholders net income (loss)

$

2.21

$

1.76

$

3.15

$

560

$

456

$

813

$

610

$

413

$

599

$

105

$ 77

$

101

$

97

$

65

$

97

$ (252)

$

(99)

$

16

After-tax adjustments to reconcile to adjusted income (loss) from

operations:

Realized investment (gains) losses

(0.29)

(0.19)

(0.13)

(75)

(48)

(34)

(47)

(42)

(22)

-

-

-

(24)

(12)

(14)

(4)

6

2

Amortization of other acquired intangible assets, net

0.06

0.09

0.07

16

24

18

12

20

14

4

4

4

-

-

-

-

-

-

Special items:

Debt extinguishment costs

0.82

-

-

209

-

-

-

-

-

-

-

-

-

-

-

209

-

-

Merger-related transaction costs

0.03

0.18

(0.18)

6

46

(47)

-

-

-

-

-

-

-

-

-

6

46

(47)

Charges associated with litigation matters

-

0.10

-

-

25

-

-

25

-

-

-

-

-

-

-

-

-

-

Adjusted income (loss) from operations

$

2.83

$

1.94

$

2.91

$

716

$

503

$

750

$

575

$

416

$

591

$

109

$ 81

$

105

$

73

$

53

$

83

$

(41)

$

(47)

$

(29)

Weighted average shares (in thousands)

253,410

259,754

258,061

Special items, pre-tax:

Debt extinguishment costs

$

321

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

321

$

-

$

-

Merger-related transaction costs

9

49

16

-

-

-

-

-

-

-

-

-

9

49

16

Charges associated with litigation matters

-

40

-

-

40

-

-

-

-

-

-

-

-

-

-

Total

$

330

$

89

$

16

$

-

$

40

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

330

$

49

$

16

(Dollars in millions, except per share amounts)

Diluted

Global

Group

Corporate

Earnings

Global

Supplemental

Disability

and

Per Share

Consolidated

Health Care

Benefits

and Life

Other

Nine Months Ended September 30,

3Q17

3Q16

3Q17

3Q16

3Q17

3Q16

3Q17

3Q16

3Q17

3Q16

3Q17

3Q16

Shareholders net income (loss)

$

7.67

$

5.72

$

1,971

$

1,485

$

1,753

$

1,414

$

283

$

214

$

253

$

81

$ (318)

$

(224)

After-tax adjustments to reconcile to adjusted income (loss) from

operations:

Realized investment (gains) losses

(0.54)

(0.27)

(140)

(71)

(85)

(49)

(9)

1

(44)

(25)

(2)

2

Amortization of other acquired intangible assets, net

0.21

0.28

54

72

40

56

14

16

-

-

-

-

Special items:

Debt extinguishment costs

0.81

-

209

-

-

-

-

-

-

-

209

-

Merger-related transaction costs (1)

0.03

0.41

8

108

-

-

-

-

-

-

8

108

Long-term care guaranty fund assessment

0.32

-

83

-

68

-

-

-

15

-

-

-

Charges associated with litigation matters

-

0.10

-

25

-

25

-

-

-

-

-

-

Adjusted income (loss) from operations

$

8.50

$

6.24

$

2,185

$

1,619

$

1,776

$

1,446

$

288

$

231

$

224

$

56

$ (103)

$

(114)

Weighted average shares (in thousands)

257,058

259,568

Common shares outstanding as of September 30, (in thousands)

247,573

256,720

Special items, pre-tax:

Debt extinguishment costs

$

321

$

-

$

-

$

-

$

-

$

-

$

-

$

-

$

321

$

-

Merger-related transaction costs (1)

88

123

-

-

-

-

-

-

88

123

Long-term care guaranty fund assessment

129

-

106

-

-

-

23

-

-

-

Charges associated with litigation matters

-

40

-

40

-

-

-

-

-

-

Total

$

538

$

163

$

106

$

40

$

-

$

-

$

23

$

-

$

409

$

123

(1) For additional information related to a one-time tax benefit of
approximately $60 million recorded in the second quarter of 2017, please
refer to Note 3 to the Consolidated Financial Statements in Cignas Form
10-Q for the period ended September 30, 2017 expected to be filed on
November 2, 2017.